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By Humberto Saabedra
During a Twitter conversation last night, the subject of Funimation’s release of Panty & Stocking with Garterbelt came up after preliminary listings for the show may have confirmed that the release would exclude a Blu-Ray version and only be released on DVD, despite the company confirming that the show would indeed be released on Blu-Ray the weekend before during its convention appearances at Anime Boston and Sakura-Con respectively. The discussion then circled around to Kadokawa’s apparent new rules on international Blu-Ray releases.

Back in February, Funimation Entertainment had finally confirmed that the second season of Sora no Otoshimono in Forte would be released on DVD/Blu-Ray as a combo pack in March after months of delays, only to be forced to announce to retailers that the release would not be released as a Blu-Ray/DVD combo as originally solicited, but would only be released on DVD, with no real explanation on why the Blu-Ray version was excluded only after being solicited to retailers 2 weeks before.

The sudden exclusion of the Blu-Ray version after being announced as such for months came as a surprise to fans of the show and led many to cancel pre-orders due to the lack of a Blu-Ray version. While many were quick to point the finger at Funimation for screwing up the solicitations, the real blame should be placed at the feet of the master licensor of the show in Kadokawa Pictures, which controls international licensing for many of Funimation’s most popular shows.

Recently, in statements made by Manga Entertainment UK via Twitter, it was revealed that Kadokawa had issued new mandates on home video releases to its international licensing partners that allude to the requirement that no Blu-Ray releases by international licensors would be allowed this calendar year and to adjust release formats accordingly.

Specific reasons were not given as to why the rule was put into place by the company, but recent activity by Funimation involving home video announcements may have confirmed the veracity of the statements, as The Future Diary was only confirmed for a DVD release later this year while no mention was made of a Blu-Ray version. Kadokawa Pictures controls international licensing rights for the show as Kadokawa Shoten also publishes the manga.

While Funimation also announced Panty and Stocking with Garterbelt as a Blu-Ray/DVD combo release during Anime Boston, the earliest listings for the show are beginning to confirm that Kadokawa is indeed forcing international licensors to drop Blu-Ray releases from release plans and announcements.

Why Kadokawa is doing this now, when some of the most popular shows controlled by the conglomerate will see release on home video this year is unknown, but if I were to make an educated guess, the idea of reverse importation may be too great for the conglomerate to ignore and it appears perfectly willing to lose money on international licenses in order to protect its shrinking home market.

Unfortunately for Kadokawa Pictures, the home video market for anime in the US is moving swiftly away from DVD and rushing towards Blu-Ray as the preferred release method for newer shows, with many making purchasing decisions based on whether the series will have a Blu-Ray version available. For Kadokawa to make such mandates to its international licensor partners is not only short-sighted, but it only hurts those that want to support their favorite shows and the companies that work to license them.

If I had the ear of the executives at Kadokawa Pictures, I would strongly suggest they reconsider their stance on international Blu-Ray releases outside Japan, otherwise they face the wrath of a fanbase that is perfectly willing to spend their money elsewhere, or worse, not give them any more money at all and even resort to piracy, which only hurts everyone in the end. I really would like to be proven wrong and see Panty & Stocking get a Blu-Ray release when it gets released later this Summer, but based on the previous release in Sora no Otoshimono Forte, that looks less and less likely and places other Kadokawa Pictures controlled titles in doubt for their own Blu-Ray releases.

The Blu-ray debut of Naruto Shippuden 2: Bonds – released both as a standalone title and in a pack with the first Shippuden movie - confirms that Manga is still committed to Blu-ray in the UK, despite the frustrations and cancellations of recent months. Indeed, a slew of Blu-ray titles are scheduled for this year, ranging from Mardock Scramble to Roujin Z.

Manga UK’s Jerome Mazandarani points out that many UK anime fans have moved from DVD to Blu-ray, obliging Manga to follow. He adds, though, that “Maybe 80 or 90% of our sales are still on DVD, so it’s very important.” The release of anime Blu-rays is a tricky proposition, balancing the demands of multiple parties. Jerome points out that the Japanese licensors and producers of an anime have their own agenda, which Manga must meet if it wants the title at all.

“They’ve got specific ideas about how they want the release packaged: when it’s released, how much we can sell it for,” Jerome says. “The licensors for anime have a hell of a lot of control over these shows, unheard of in the normal video licensing business. They could say, for example, that you can only sell it at this price; that you can’t release it until six months after it’s out in Japan; that you can’t do x, y or z...”

“International licensing for anime, for most Japanese companies, is probably less than 10% of their overall business,” Jerome points out. “So why would you give your prized anime licenses to a foreign distributor and let them do whatever they want with it unchecked? Let them put it on Youtube or itunes or Netflix? Let them sell it at stupidly low prices, so that Japanese customers can import it? All the decisions the Japanese licensors make are based on protecting their distributors in Japan, and Japan sustains a model where a K-ON! three or four-episode DVD can sell at £30, and the Blu-ray at over £40, and sell a quarter of a million copies.”

Recently, Manga had to cancel the Blu-rays of both K-ON! and the film The Disappearance of Haruhi Suzumiya. “We wanted to get most of K-ON! out last year,” said Jerome. “But we weren’t allowed to release a complete season box-set if we wanted access to the English dub, which Bandai produced for America. We either had to release it the way Bandai was doing, or wait until after they’d finished the campaign in the U.S. I decided to follow them, so the series want out on single-disc volumes. But the DVD sales were so low it no longer made sense to invest in a Blu-ray release that was unlikely to break even.”

The single-disc decision had been taken for the fans. “Fans hate waiting a year or two years after something’s been simulcast or on Japanese TV to get their hands on it. So in the interests of trying to sell more by narrowing the window, we made a strategic error releasing K-ON! that way [on individual discs]. I think we would have been better off just not releasing it last year. Rather we could have waited until now and released the complete first season on both DVD and Blu-ray.”

The problem with Disappearance was different. On the film, Manga was sharing authoring costs with the Australian distributor, Madman. “We wouldn’t have even released a lot of anime if it wasn’t for Madman, including Spice and Wolf (due on DVD in June) and a lot of the ‘moe’ titles that we’ve released over the last two years. Before, we wouldn’t have bothered with them, because we don’t sell a lot of them. Sharing costs with Madman halves our production/inception costs and makes a lot more releases viable. We commonly see if Madman or Siren have released a title in Australia, because then we know there’s a PAL DVD version in most cases.”

In the case of The Disappearance of Haruhi Suzumiya, Madman and Manga made a deal with Bandai to access the US Blu-ray replication master. “We got the Blu-ray from Bandai, which had been tested and QC’d (assessed on quality control) on American PS3s. When Madman QC’d it, that was fine, because most of the PS3s in Australia are American ones. But it didn’t work on a European PlayStation! We’d already invested a sizeable sum of money on the authoring for the Blu-ray and we were suddenly put in a position where we had to re-author it again from scratch at three times our initial cost. It was a terrible situation to be in and a painful decision had to be made. Authoring Blu-ray is time consuming, costly and very, very complicated.”

Another high-profile disappointment was the cancellation of Fullmetal Alchemist: Brotherhood on Blu-ray after the first two sets (out of five). “It was really disappointing; we saw a 50% drop in Blu-ray sales from Volumes 1 to 2,” Jerome says. Manga was tied to fixed costs and to a Minimum Order Quantity (which meant it was obliged to make a hefty number of copies of each volume), so the series became unviable.

“We could have gotten the rest of Brotherhood out in a Blu-ray box-set,” Jerome says, “but that would have brought up new problems. What about those consumers who bought part 1 and 2 individually? Do we set up some kind of discount scheme? How would we implement that? It would have been a logistical nightmare!” The price would also have been prohibitive for many fans. “To be honest, we would have had to sell the box-sets at a very high price point. Possibly as much as £150 to £200, without offering much in terms of special packaging.”

These days, Manga focuses on Blu-rays for feature films and for shorter series of around 13 episodes, such as High School of the Dead and the forthcoming Angel Beats. However, Jerome doesn’t rule out longer shows on Blu-ray– “If FMA: Brotherhood had been only 26 episodes long, it would have been totally viable on Blu-ray.” In principle, if the costs of Blu-ray came down, then Manga could also complete a series such as Xam’d: Lost Memories.

Following the Naruto Shippuden films, April 16 will see the first film in the SF thriller trilogy, Mardock Scramble, which Jerome rates as, “One of the best new anime films that I’ve seen in ages; it’s beautiful.” The first three Bleach feature films – Fade to Black and its predecessors, Memories of Nobody and The Diamond Dust Rebellion – will debut on Blu-ray in May, as will the Ghost in the Shell film Solid State Society.

Old and new films will follow. Pensioners and big robots figure in the wonderful SF comedy movie Roujin Z (written by Katsuhiro Otomo), released in June, which is also when we’ll see the afterlife series Angel Beats. Then it’s kids in space in another feature film, Welcome to the Space Show in July. Manga is also planning the Blu-ray debuts of both big-screen Fullmetal Alchemists – the new film, Sacred Star of Milos, as well as 2005’s Conqueror of Shamballa. Just the thing to chase Blu-ray blues away…

Dang it Avalon, you c(XD LOL)-block Shirou and Reinforce, but don't protect his mind in other ways? What is wrong, you woman?
Friendship, be made! Magical power, gather! Starlight Breaker.... this world!

DVDs, as containers for film and television, are a thing of the past, and I'm surprised at how they've managed to survive so long. If there is a BD release of an anime somewhere, there is no way that I'm going to purchase the DVD release, even if I've already seen the anime. I want to collect my anime in the most pristine quality possible.

I collect Blu-Rays if there are Blu-Rays (and if they are subbed/dubbed) and DVDs come second. The reverse importation fears went mad already.

__________________

Dang it Avalon, you c(XD LOL)-block Shirou and Reinforce, but don't protect his mind in other ways? What is wrong, you woman?
Friendship, be made! Magical power, gather! Starlight Breaker.... this world!

Well I can think of a reason for that in the US market. Japan and North America are both Region A for Blu-ray. Meaning "cheap" US copies on BD can be imported back to Japan for less than the locally made BD version costs...even with shipping charges.

For DVDs, the US is Region 1 and Japan Region 2. Thus while someone is Japan could ship the DVD back home, they would need a Region 1 player and thus it would be less common to "lose a sale" due to DVDs from America.

On the UK market, however, Western Europe is DVD Region 2 as well as Japan (though there seems to be some weird sub-region stuff going on in Europe) but Europe is Region B for Blu-ray. In theory, one could import a European Region 2 DVD to Japan, but I don't know what they pricing is like on the Euro or the Pound verse the Yen.

In recent times, some Japanese publishers have started to put English subtitles on their Blu-ray releases right from the beginning. Thus they don't need an international parter, just someplace willing to sell at their prices. They have not been putting these subtitles on the DVD versions (guess there is a larger market for Region A BD than Region 2 DVDs in the English speaking world).

They could have just restricted it though to their regions (like what Aniplex is doing: restricting to U.S. and Canada only [though this is a bad move]), instead of restricting Blu-Ray altogether. (I'm also one of the 1% importers who import from Japan)

__________________

Dang it Avalon, you c(XD LOL)-block Shirou and Reinforce, but don't protect his mind in other ways? What is wrong, you woman?
Friendship, be made! Magical power, gather! Starlight Breaker.... this world!

Right now it's too early to tell anything. The earlier BD delays/cancellations can be traced back to Funi not watching what was happening in Japan (Strike Witches-S2 BD-Box/movie release in theatres, Sora no Otoshimono-Movie release on BD/DVD), so those releases may have nothing to do with it or everything. All we've seen are preliminary solicitations (nothing official) and the word from a PR rep who may or may not be correct. I've read the article and it's well-sourced, but it's too early to make conclusions with the data we currently have.

(It is plausible that Funi's decisions to release those two properties at those times pissed off Kadokawa, thus causing this whole problem, but that's merely speculation from myself.)

Quote:

Originally Posted by Ithekro

Well I can think of a reason for that in the US market. Japan and North America are both Region A for Blu-ray. Meaning "cheap" US copies on BD can be imported back to Japan for less than the locally made BD version costs...even with shipping charges.

For DVDs, the US is Region 1 and Japan Region 2. Thus while someone is Japan could ship the DVD back home, they would need a Region 1 player and thus it would be less common to "lose a sale" due to DVDs from America.

On the UK market, however, Western Europe is DVD Region 2 as well as Japan (though there seems to be some weird sub-region stuff going on in Europe) but Europe is Region B for Blu-ray. In theory, one could import a European Region 2 DVD to Japan, but I don't know what they pricing is like on the Euro or the Pound verse the Yen.

In recent times, some Japanese publishers have started to putEenglish subtitles in their Blu-ray releases right from the beginning. Thus they don't need an international parter, just someplace willing to sell at their prices. They have not been putting these subtitles on the DVD versions (guess there is a larger market for Region A BD than Region 2 DVDs in the English speaking world).

If we believe what Manga is saying, then their market (Blu-ray region B) would be prevented from selling BDs, despite the fact that they would not be playable in Japanese BD players. That does not make much sense.

DVDs have an issue with NTSC and PAL, so despite the fact that Europe/Japan share the same region, European DVDs are very difficult to be played on a Japanese DVD player.

A lot of the recent English subtitles are on BD-Boxes from previous DVD releases and/or if there are no DVD releases planned, so that point is somewhat null. I've seen the same series have subtitles on both DVDs and a BD-Box. It depends on what the publisher wants to accomplish.

Well at least it's Kadokawa... fortunately the others are still pumping out Blu-Rays. Is Kadokawa the one responsible for the Blu-Ray market here?

__________________

Dang it Avalon, you c(XD LOL)-block Shirou and Reinforce, but don't protect his mind in other ways? What is wrong, you woman?
Friendship, be made! Magical power, gather! Starlight Breaker.... this world!

I honestly don't find this development surprising in the least. I think the writing is on the wall for R1 licensors unless we're talking about properties requiring a dub. At some point the Japanese distributors will start slapping English subtitles on the BD releases and selling internationally. Really what does Funimation bring to the market any more other than dubbing? For series other than the most mainstream of titles, marketing happens by word-of-mouth and exposure to streamed simulcasts. Worldwide streaming by the Japanese distributors isn't that far off. Just the other day FujiTV announced that it was going to start distributing some portion of their programming on YouTube, though the announcement was vague about where it would be available.

Despite the substantial number of dub-only viewers, especially among older fans like those who post in the Amazon forums, their ranks are shrinking over time as a proportion of the R1 anime audience. Younger viewers seem more open to subs and more likely to view anime via media other than physical discs. Those folks who want high-quality BD releases will be willing to pay the kinds of up-market prices that Aniplex is asking for Madoka. Personally I'd bet that they would have sold nearly as many copies of that show without a dub as with one.

So I'm not surprised to see the Japanese publishers try to enforce a BD in JP and DVD elsewhere model. Eventually it will be BD nearly everywhere at prices more in line with the $10-15/episode price that Aniplex is asking for Madoka. For the rest of us there's streaming.

I'm actually impressed with the speed at which the Japanese publishers have adapted to these trends. The old image of these companies as stodgy and inertial seems less and less accurate.

DVDs, as containers for film and television, are a thing of the past, and I'm surprised at how they've managed to survive so long. If there is a BD release of an anime somewhere, there is no way that I'm going to purchase the DVD release, even if I've already seen the anime. I want to collect my anime in the most pristine quality possible.

Optical media as containers for data are rapidly becoming a thing of the past... That point aside, importing the expensive Japanese BRDs instead of going out and buying cheap US DVD releases is exactly what they want. It makes them more money and what company doesn't want that?

I would rather see them release US BRD's at Japanese prices (Madoka) rather than no US BRD releases at all though.

Good thing that I'm taking economics right now, as reading this thread is easily making me know how price discrimination can hurt consumers.

Quote:

Originally Posted by SeijiSensei

I'm actually impressed with the speed at which the Japanese publishers have adapted to these trends. The old image of these companies as stodgy and inertial seems less and less accurate.

I do hope that the other Japanese publishers don't follow suit, but maybe that's just asking for too much.

Quote:

Originally Posted by Random32

Optical media as containers for data are rapidly becoming a thing of the past...

Perhaps so, but I still can't stack a digital download on my shelf.

Quote:

Originally Posted by Random32

That point aside, importing the expensive Japanese BRDs instead of going out and buying cheap US DVD releases is exactly what they want. It makes them more money and what company doesn't want that?

I would rather see them release US BRD's at Japanese prices (Madoka) rather than no US BRD releases at all though.

Agreed. Especially when you consider the fact that Madoka Magica is actually sold at half of the price of the Japanese release, or even a fourth if you're buying the regular edition. It's still crazy compared to Funimation's prices, but it becomes a godsend when you consider how much you are saving by not buying the Japanese release.

Good thing that I'm taking economics right now, as reading this thread is easily making me know how price discrimination can hurt consumers.

Price discrimination is a vital aspect of marketing intellectual property. While one series might be seen as a competitor to others, in fact each item is a near-monopoly. There's only one Madoka, one Boston Red Sox, one Gone with the Wind, etc. Profits are maximized when you can sell the item to different market segments at the highest price each segment is willing to pay. Thus we see limited editions, then standard editions, then discount editions (e.g, Funimation S.A.V.E), then bargain bins. Monopoly provides the leverage for price discrimination.

I'm not sure that this "hurts" consumers necessarily since consumers who derive the greatest "marginal utility" from purchasing the good pay more than ones whose marginal utility from the purchase is less. There's also the additional utility return of owning a luxury item that may have value above and beyond the item itself. All watches keep pretty accurate time these days, but some are Rolexes and others are from Timex.

Price discrimination is a vital aspect of marketing intellectual property. While one series might be seen as a competitor to others, in fact each item is a near-monopoly. There's only one Madoka, one Boston Red Sox, one Gone with the Wind, etc. Profits are maximized when you can sell the item to different market segments at the highest price each segment is willing to pay. Thus we see limited editions, then standard editions, then discount editions (e.g, Funimation S.A.V.E), then bargain bins. Monopoly provides the leverage for price discrimination.

I'm not sure that this "hurts" consumers necessarily since consumers who derive the greatest "marginal utility" from purchasing the good pay more than ones whose marginal utility from the purchase is less. There's also the additional utility return of owning a luxury item that may have value above and beyond the item itself. All watches keep pretty accurate time these days, but some are Rolexes and others are from Timex.

I have no issue with price discrimination alone, in fact I think it's essential for large businesses, but I was alluding to companies restricting consumer choices in order to maintain their standards for price discrimination.

I was furious when I realized that Nintendo was region locking the 3DS, for instance. If I wanted to play both a game in English and a game released only in Japanese, I would have to purchase two 3DS's. We live in an age when people move to other countries a lot more than before, sometimes because of college and sometimes because of a job promotion, and certain business practices such as region locks and import restrictions feel increasingly counter-developmental.

Eliminating sales of BDs in a region is essentially flipping the bird to consumers in that region who value video quality. Sure, some of them will still import BDs, but those will be the hardcore fans who already have a connection with the anime in context (often through fansubs). But what about those who wish to watch their anime legitimately? They wouldn't normally invest in Japan-priced BDs of an anime they haven't seen yet (most likely they don't even know Japanese), so they would either have to purchase inferior DVDs or resort to pirating BD-rips. This is for series that aren't streamed on Crunchyroll, of course.

Unfortunately this hasn't worked since the UK arm of united publications is still getting stock of aniplex USA releases in from it's US branch.

Are there region-free Blu-ray players? I suppose the players are cheap enough these days to enable people outside Region A to buy one for each region. HDTVs are pretty standardized world-wide now, too, aren't they? From what little I know about foreign television standards, there aren't standards conflicts for HD devices equivalent to NTSC/PAL/SECAM, right?

Unfortunately this hasn't worked since the UK arm of united publications is still getting stock of aniplex USA releases in from it's US branch.

Yeah but I wonder if they will make Madoka from scratch again.

__________________

Dang it Avalon, you c(XD LOL)-block Shirou and Reinforce, but don't protect his mind in other ways? What is wrong, you woman?
Friendship, be made! Magical power, gather! Starlight Breaker.... this world!

Eliminating sales of BDs in a region is essentially flipping the bird to consumers in that region who value video quality. Sure, some of them will still import BDs, but those will be the hardcore fans who already have a connection with the anime in context (often through fansubs). But what about those who wish to watch their anime legitimately? They wouldn't normally invest in Japan-priced BDs of an anime they haven't seen yet (most likely they don't even know Japanese), so they would either have to purchase inferior DVDs or resort to pirating BD-rips. This is for series that aren't streamed on Crunchyroll, of course.

Well, at the end of the day, the amount of shows that aren't getting streamed one way or another are becoming more and more rare, particularly when you consider shows that people are most likely to be interested in. If you look at the Current Series forum, it's to the point now where rather than putting a tag for "Licensed" or "Crunchyroll", it'd be a lot less work just to put a tag on those shows that aren't either licensed or streaming. I'm actually thinking that the only reason a show wouldn't be streaming probably has something to do with weird licensing rights.

I do think that territorial locking is a bit of an anachronism, but it's really all about protecting licensors and distributors. In the case of the 3DS this makes sense because all the other regions contribute significantly to the overall industry's bottom line, but anime is so slanted in that sense. So they'll try to use whatever tools they can to keep cheap products from crossing borders, while keeping the expensive product (Japanese Blu-Rays) largely region-free. The only way to really resolve these issues would be to try to bring global prices for anime on Blu-Ray closer into alignment with each other, but I don't see how that's going to be easy. So I'd definitely expect more delays and "downgrades" in the meantime, even if the industry also knows that will increase piracy. When one customer is paying them maybe $5/series, and another is paying them maybe $40/disc (times 6+), it's pretty clear what will matter most.

Still, to go back to your main point, I think the audience of people you're talking about is pretty rare. You're talking about people who a) only want to watch their anime legally, and b) only want to watch in HD, and c) would be willing to purchase a show on Blu-Ray sight unseen if the price is right, but d) would also watch legal HD streams if they were available. It's hard for me to imagine this particular combination. The more common similar group I've seen online would be the people who cut out d) above and hate streaming with a passion and are only interested in physical releases. But their criteria for purchasing is often: it has to be high-quality HD, English-dubbed, and cheaply-priced. I don't know if the Japanese licensors really want to serve these people because their expectations are out of line with the price they're willing to pay (mostly due to poor strategic planning by the licensees over the years). It may seem cruel to think of them trying to "phase out" certain fans (well, their expectations anyway), but I think that's the overall strategy they'll want to take.

Quote:

Originally Posted by SeijiSensei

Are there region-free Blu-ray players? I suppose the players are cheap enough these days to enable people outside Region A to buy one for each region. HDTVs are pretty standardized world-wide now, too, aren't they? From what little I know about foreign television standards, there aren't standards conflicts for HD devices equivalent to NTSC/PAL/SECAM, right?

There is still a small difference in terms of the content that gets created (in PAL countries they still use 25/50 fps, whereas NTSC countries still use 29.97/54.94, even in HD), but most Blu-Ray players and HDTV sets support all the varying frame rates. And yes, there are definitely region-free Blu-Ray players, but as you say, they're getting to the point where it's potentially cheap enough to have more than one if you're going to be importing a lot of discs. There is also of course software that for Blu-Ray drives in computers that can serve the purpose. So, at least on the Blu-Ray front, region coding is even more minor than it was in the DVD days.

There is still a small difference in terms of the content that gets created (in PAL countries they still use 25/50 fps, whereas NTSC countries still use 29.97/54.94, even in HD), but most Blu-Ray players and HDTV sets support all the varying frame rates.

I thought a lot of Blu-ray content was distributed in 24 fps progressive with "stepdown" applied as needed to adjust to the frame rate differences in different countries. Is the frame rate on a Region B Blu-ray different from that on a Region A, or is there just some type of region coding on the disc that makes it Region A or B?

I realize I should know more about this stuff, but I'm too lazy to read all the documentation!